Archive - Apr 1, 2008
Measuring Development By Person, Not Place
What is the best way to measure economic development? Most economists still focus on gross domestic product (GDP) or gross national income (GNI) per capita. Bhutan has inspired some to focus on "gross national happiness" (see my earlier post on Bhutan and GNH here). Researchers at the Center for Global Development are now proposing a new measure: income per natural.
Michael Clemens and Lant Pritchett use income per natural to measure the average annual income of all individuals who are born in a given country, regardless of where they live at any given time. According to their calculations, almost 43 million people live in countries where income per natural is 50 percent higher than GDP per capita, and for over 1 billion people the difference is greater than 10 percent. Clemens and Pritchett argue that this new measure recognizes that, for many, emigration is an important means towards increased welfare.
The bottom line: migration is one of the most important sources of poverty reduction for a large portion of the developing world. If economic development is defined as rising human well being, then a residence-neutral measure of well-being emphasizes that crossing international borders is not an alternative to economic development, it is economic development.
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